Macy's Leads Investors on a Parade

Investors in Macy's (NYSE: M) have plenty to be thankful for this holiday season. Shares of the premier retailer have broken out into all-time-high territory following third-quarter results. Despite already being much larger than competitors Dillard's (NYSE: DDS) and J.C. Penney (NYSE: JCP) , Macy's continues to grow at percentages the other two companies could only dream of.

Macy's saw an improvement in sales in every region of the country, which it attributed to marketing strategies. Macy's noted that the month of October was particularly strong, and the company expects that momentum will continue into the vital holiday season. In preparation for a great November and December, Macy's hired 83,000 additional seasonal workers. All of this is despite what Macy's describes as "the tepid economic climate."

Going forward, Macy's expects the second half of 2013 to show same-store sales growth of 2.5% to 4%. If the holiday season performs as well as expected, that 4% could get beaten.

The less fortunate Meanwhile, Dillard's also had decent third-quarter results, but not nearly at the level of Macy's. Sales inched up just over 1% to $1.469 billion. Same-store sales nudged up 1%. Adjusted EPS increased 18%. Though Dillard's was short on details in terms of guidance or outlook, CEO William T. Dillard stated, "As we enter our 75th anniversary holiday season, we are looking forward to serving our customers nationwide at an exceptional level." That's great for customers, but no details for shareholders.

J.C. Penney has been having its own troubles. The best thing that could happen to Macy's would be to see J.C. Penney fall. At the very least, J.C. Penney is still several quarters away from that, if at all, so it's not something Macy's can count on for now. However, J.C. Penney doesn't appear to be much of a threat these days in stopping Macy's growth.

In a celebratory press release, J.C. Penney boasted its 0.9% increase in same-store sales for the month of October. It was the biggest increase in same-store sales since December 2011. While it sounds great on the surface, the company had a large overhang of unsold inventory from the previous two quarters. It slashed prices on this overhang, which helped lure guests into buying cheap merchandise. Guest traffic was actually down. This means the boost simply came from remaining patrons who grabbed items from bargain racks and shelves. The company is expected to report its results on Nov. 20.

Foolish final thoughtsLook for Macy's to potentially hit it out of the park this holiday season. Keep an eye on consumer trend reports. Macy's has clearly found the right strategy and marketing approach, so far. This puts it ahead of competitors even during slow times. If the season is strong, look for Macy's results to magnify its success.

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